Richard Li's $2.4bln CSL deal reconnects with past

HKT Trust and HKT

20/12/2013 07:21

By Una Galani HONG KONG, Dec 20 (Reuters Breakingviews) - The Hong Kong mogul's telecoms group HKT is paying 6.1 times adjusted EBITDA to buy back the mobile company he sold to Telstra in 2001. The synergies needed to justify a premium of roughly 31 percent aren't too taxing. HKT ends up more indebted, but it's basically a happy reunion. Full view will be published shortly. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS: www.breakingviews.com/TOPNewsSubscription ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> CONTEXT NEWS - Telecom operator HKT agreed to buy Telstra's Hong Kong mobile phone business CSL in an all-cash deal for HK$18.9 billion ($2.4 billion) on Dec. 20. - Australia's biggest phone company will sell its 76.4 percent stake to HKT, which is a listed arm of PCCW, a media conglomerate controlled by tycoon Richard Li.  - HKT will also buy the remaining stake in CSL held by Hong Kong-based New World Development Ltd., the property developer controlled by the family of local businessman Cheng Yu-tung. - The deal will turn HKT from the smallest into the largest mobile operator by customers in Hong Kong, and reduce the number of players in the market from five to four.  - As part of the effort to secure the necessary regulatory approval, HKT said it would not seek to renew some of its 3G spectrum when it expires in 2016. The deal will expire on June 30, 2014. - HKT said it intends to refinance the deal with longer term financing which could take the form of a long term loan, rights issue, or combination of both.  - Standard Chartered advised HKT on the deal and will provide a $2.5 billion loan facility which may be shared with other banks.  - Telstra bought 60 percent of CSL from PCCW for $1.7 billion in 2001. It bought the remaining 40 percent for $614 million in 2002.  - HKT said that the acquisition will not result in any change to its distribution policy.  - HKT Trust statement: http://www.hkexnews.hk/listedco/listconews/sehk/2013/1220/LTN20131220043.pdf - Reuters: Australia's Telstra to sell Hong Kong unit to Li's HKT for $2 bln  ID:nL3N0JY435  (The author is a Reuters Breakingviews columnist. The opinions expressed are her own.) - For previous columns by the author, Reuters customers can click on  GALANI/  (Editing by John Foley and Katrina Hamlin) ((una.galani@thomsonreuters.com))     ((Reuters messaging: una.galani.thomsonreuters.com@reuters.net)) Keywords: BREAKINGVIEWS HONG KONG MOBILE